Thursday, January 29, 2009

Recognition: Pros and Cons

A post from The Simple Dollar

Pros: a great source of motivation, when used wisely
Cons: can lead to short-term decisions with very bad long-term consequences

This need for recognition runs through our lives. It feels a lot better to get positive attention from other people than it does to be met with indifference or with negative attention. It drives a lot of the little choices we make, too.

The painful truth, though, is that such recognition is fleeting. After the impressed people have gone away and your big purchase is forgotten about, you’re left with some big bills and a budget that’s being stretched to its limit to cover it. The recognition is over but you’re still paying for it.

Consider another path. Go for the low end on your purchases. Get that late model used car instead of the new one. Buy a smaller house. These purchases won’t get you that immediate recognition, but it does earn you several other things. You’re not stuck with the big bills, giving you breathing room to save for the future. That can directly lead you to an earlier retirement or to other things that you personally value - travel, financial security, and so on.

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